Reprinted from

Anderson vs. Otto for MN state auditor
10/25/2006
by Jennifer Martin-Romme

Republican incumbent Patricia Anderson and DFL challenger Rebecca Otto are facing off in the contest for state auditor in Minnesota.

Anderson may be headed for a tough race in the northeast due to her role in the failure of legislation to allow Duluth to establish an irrevocable trust fund. A Duluth city council-appointed task force recommended the fund to resolve the city’s liability for retiree healthcare. Under current rules municipalities can’t use a trust fund to pay for employee benefits, so the fund required special state legislation.

According to state Sen. Yvonne Prettner-Solon, DFL-Duluth, Anderson is pushing municipalities to invest only with the State Board of Investment. Many cities (including Duluth) carry low-risk investments in insurance and banks, which Anderson claimed made the auditing more difficult.

Duluth’s request to establish an irrevocable trust and put money into higher-risk/higher-yield investments was part of an omnibus bill that allowed cities to continue investing outside the State Board. “Pat Anderson said, ‘If you open it up to include that, I’ll pull the bill.’...That’s what killed it in the House,” says Prettner-Solon.

“That’s incorrect. I’d like to know who’s saying that,” said Anderson’s campaign spokesman Tim Miller. “She was for the legislation...but opposed opening it up to other businesses, banks, and insurance companies. She thought it should be set up solely through (the State Board of Investment). They get a better rate of return.”

How does the rate of return compare? “I can’t answer that,” Miller said. Anderson quickly returned calls to address the question. “The original legislation was mine,” she said. “I actually took the initiative.

Outside Duluth, there was no real push for this...I heard comments in the Senate that Duluth doesn’t have money to invest right now anyway.

The omnibus bill never passed the full Senate due to other issues.” Anderson says she fended off attempts by bankers and brokerage firms to add language to the bill that would allow investment outside the State Board. “Right now, cities can earn 4.5 percent on bonds… banks and insurance firms return considerably less.” The State Board of Investment earns 8.5 to 12 percent, she said.

Anderson denies any role in the failure of the legislation and says she was, in fact, a strong advocate for it. “Most of the legislators don’t understand what’s going on or why (the irrevocable trust) was needed. They were more obsessed with stadiums and the bonding bill.”

The race between Anderson and Otto has been about fighting words and flying accusations.

On Aug. 15, Otto issued a press statement claiming that Anderson’s Aug. 8 Special District Finances report contained more than $200 million worth of errors. Otto claimed to have found no errors in the reports of previous auditors.

The Special District Finances report details revenue and spending for 520 districts, including housing, airports, public transportation, and hospitals.

Otto accused Anderson of deliberately misrepresenting the numbers for partisan reasons. For example Anderson said the Metropolitan Council Bus Transit system’s $165 million operating loss is “equal to about 46 percent of the total operating losses for all special district enterprises.” According to Otto, the number is only 36 percent because Anderson confused total losses with net losses, counting a $100 million gain as a loss.

According to the Taxpayer’s League of Minnesota, Anderson is a signatory to its pledge to “oppose...any and all efforts to increase taxes.” In 2002, the Taxpayer’s League rented billboards calling the transit system a form of “social engineering.”

On Aug. 16, Minnesota GOP chairman Ron Carey issued a press release stating, “Otto can’t count, can’t tell the truth,” and “needs remedial accounting courses.”

On Aug. 21, Anderson released a statement to the Grand Forks Herald: “Otto got it wrong today. She clearly does not understand basic governmental accounting. Otto claimed there were hundreds of millions of dollars in errors, when in fact there were none.”

Yet on Aug. 22, Anderson republished the report to reflect a $180 million change in the non-operating revenue. The date of the report is unchanged and contains no notation that the information has been updated.

A preview to this battle came when laptop computers were stolen from Anderson’s office in May and June. The hard drives contained non-encrypted personal information about welfare recipients across the state.

Otto claimed the crimes were an “inside job.” However, police have not identified a suspect in the case nor suggested that Anderson or her staff were responsible.